Apple Inc. (AAPL) continues to shape the tape somewhat each day and plenty of investors with a cost-basis above $650 abide by the hope and pray strategy for the stock to go higher. For a little more clarity using the more proven technique of technical analysis, let’s look at a few charts.
When it comes to Apple Inc. (AAPL), the first thing I have been pointing to in recent months is the longer-term trend. The below chart, which looks back to 2009 nicely displays the up-trend that in 2012 went vertical and out of the nice and steady up-trend. As such, the correction we have seen since the September 2012 top is thus far nothing more spectacular than a mean-reversion move back to a longer-term up-trending channel. This is not to say that the stock can’t fall below the up-trend, but for now my focus remains around this channel.
Looking at the charts a little closer-up, let’s focus on the correction/down-trend that started in mid-September 2012. The first swing lower from September to the November lows managed to retrace almost 50% in early December before running into resistance. A drop below the November lows would target an area near $460.
Even closer-up, the swing from the early December highs to the mid December lows retraced close to 61.80% by January 2, 2013 (an important Fibonacci resistance area). This swing now targets an area just near $480, which also happens to coincide with the bottom of the longer-term up-trending channel discussed above.
So, I currently see two active swings in the chart of Apple Inc. (AAPL), both of which point to targets below the $500 mark. The first target, conservatively near $480 is roughly 8% lower from yesterday’s closing price of the stock, and the second target closer to $460 is about 12% away. These price levels will remain active targets until such time when the stock develops a meaningful reversal signal.
In terms of the momentum oscillators, the stock should have plenty of downside momentum left to drop below the $500 mark if I look at the stochatic or the Relative Strength Index.